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In every area of practice, WilmerHale brings the insight, dedication to excellence, and commitment to client service needed for our clients to achieve their business objectives. Our five-department structure and team approach to service enable us to provide the highest level of responsiveness and access to lawyers with the most appropriate experience.

On
15 May 2018, the UK Parliamentary Treasury Select Committee heard evidence from
representatives of Transparency International, Global Witness and the RUSI
Centre for Financial Crime and Security Studies as part of its inquiry into the
UK’s anti-money laundering (AML), counter-terrorist financing (CTF) and
sanctions regimes.

The
oral and written evidence submitted contended that the UK remains poorly
equipped to deal with the economic crime risks inherent in acting as a global
financial centre and proposed a number of robust policy recommendations, four of
which are detailed below:

1. Impose restrictions
on non-UK company formation agents

Trust
or company service providers (TCSPs, i.e. firms that set up UK companies en masse) who do not carry on business
in the UK are currently able to incorporate UK companies without complying with
UK standards for money laundering checks or oversight from an AML supervisor. It
was recommended that TCSPs who are not registered with a UK AML supervisor
should be prohibited from setting up companies in the UK.

2. Enforce the UK sanctions
regime

The
Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, was
established in March 2016 to enforce financial sanctions but there is no evidence,
in the opinion of those giving evidence to the Committee, that OFSI acts as any
sort of deterrent to UK-based sanctions violations. Despite suspected sanctions
breaches with an aggregate value of £1.4 billion being reported to OFSI in
2017, the UK has not yet imposed any criminal or civil penalties for sanctions
violations. It was recommended that OFSI
make use of its civil penalty powers under the Policing and Crime Act 2017 to
ensure that sanctions violations are dealt with in an effective, proportionate
and dissuasive manner.

3. Consolidate the UK’s
AML supervisory regime

The
view of those giving evidence to the Committee is that there are currently too
many (a total of 25) statutory and professional body AML supervisors
responsible for overseeing money laundering checks, which prevents a consistent
standard of supervision being applied across sectors. There is also no
institutional separation between many AML supervisors’ lobbying and supervisory
functions and the newly created Office for Professional Body Anti-Money
Laundering Supervision does not have any remit over the statutory AML/ CFT
supervisors, i.e. HMRC, the Financial Conduct Authority and the Gambling
Commission. It was recommended that the AML supervisory system be consolidated
and further reformed to ensure: equality between supervisors in the use of robust
and visible sanctions; coordinated intelligence sharing between supervisors;
and a coherent and effective system for overseeing AML checks in the private
sector.

4. Appoint an Economic
Crime Commissioner

There is a lack of individual
accountability amongst the wide range of ministers, civil servants, agencies
and departments involved in tackling economic crime in the UK, according to
those giving evidence to the Committee. It was recommended that an independent Economic
Crime Commissioner be appointed who will be directly accountable for the
effectiveness of the UK’s economic crime framework.

Where next?

The
Treasury Committee’s economic crime inquiry remains ongoing and it will publish
its findings in the coming months. What seems inevitable is that its findings
will portend the Financial Action Task Force’s evaluation of the UK’s AML and
CTF regime, which is currently being finalised and the results of which will be
published before the end of the year.

In every area of practice, WilmerHale brings the insight, dedication to excellence, and commitment to client service needed for our clients to achieve their business objectives. Our five-department structure and team approach to service enable us to provide the highest level of responsiveness and access to lawyers with the most appropriate experience.